¶ The Nuclear Industry's Cost Challenge
Latitude Media covering the new. The energy transition. In 2025, Georgia Power finished construction on Vogel units three and four. These were the country's first new nuclear reactors in 30 years. And to put it mildly, they came in way over budget.
Two new nuclear reactors under construction in Georgia will cost far more than expected. The new reactors will now share a price tag of$28.5 billion, almost double their original cost. the higher costs coming from more construction delays.
The main challenge with new nuclear is really the cost. It's a twofold problem. It's not just high cost, it's high cost uncertainty. And we we're in a we're in a particularly kind of perilous moment where People are recognizing the value of the fixed, reliable, base low power that that nuclear can provide without the carbon emissions. But if it can't provide it at at the cost that people need it to be delivered, it's just not going to be there as a solution.
That's Mike Laufer, the co-founder and CEO of nuclear developer Kairos Power, one of the new guard companies trying to address the problems of industry's old guard. Vogel illustrates the twin challenges facing nuclear in the U.S. It's not just the staggering price tag, it's the unpredictability of that price tag. That volatility makes sense in an industry that only builds a handful of reactors every few decades. It just doesn't have the track record of repetition to get to cost consistency.
But Kairos wants to change that.
¶ Kairos's Iterative & Non-Nuclear Approach
So Kaiwas were really founded on the premise that there has to be a different way to accelerate and drive down the costs through every phase of the process.
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The company's approach was a counterintuitive one. First, perfect the non-nuclear parts of the plant, the foundations, the power systems, and the controls. These are the components that tend to drive up costs in a finished reactor.
When Kairos was founded eight and a half years ago, this was an unusual idea. People are like, why would you why would you put all these investments in these big non-nuclear demonstrations? Like it's extra work in the process.
Second, focus on rapid iteration. This means testing things in months and years, not decades. With a new iterative development approach and a new technology, Cairo set out to change how nuclear is developed in the US. But they immediately ran into challenges. For one, the industry's entrenched culture.
If you buy into the iterative process, like you don't know what you're gonna learn. And so you have to be able to take that information, which which sounds simple, but engineers and people, and nuclear engineers in particular like to have everything like mapped out, like and a very linear process as they go through it. It's very hard to train people to to do that.
On top of implementing a new approach to innovation and iteration, they were trying a whole new reactor design, and that came with some serious challenges, the kinds that could derail a project. For example, in 2022, Kairos ordered a reactor vessel for an engineering test unit as a sort of training run of its design. And it didn't work. It wound up testing out of tolerance. In other words, it wasn't fit to run.
If this was the reactor and the vessel was out of tolerance, it could be fatal to the project, depending on what you're looking at. It would at least would be a huge delay because you wouldn't have to just replace the vessel, you'd have to do root cause analysis about how you ended up in that situation in the first place to make sure you don't end up there again.
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Setbacks like this are exactly why nuclear companies rigorously test their tech and why they face such intense regulatory scrutiny before ever turning on a reactor. The big question is. Can the industry navigate this regulatory process and build reactors quickly, affordably, and at scale? Kairos set out to try.
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I'm Lara Pierpoint, and this is the Green Blueprint, a show about the architects of the clean energy economy. We've already invented most of the solutions needed to decarbonize the global economy, but many of those technologies are not yet commercial, and they need to get financed and built at
scale. We don't have decades to get them commercialized, we have years. This week we're talking with Mike Loffar, the co-founder and CEO of Kairos Power, about trying to drive down the cost of nuclear with a first-of-a-kind technology. and a highly iterative development approach that upends the traditional model of building nuclear.
I I tend to be a positive person, so it's like, you know, setbacks or learning experiences that like that's why we're doing the iterations is to kind of smoke out those weaknesses or those those potential failure modes at the point where you can still recover.
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When Mike Loffer and its co-founders launched Kairos in twenty sixteen, they started with two well-established technologies. One was high-temperature gas reactors, and these use a fuel called triso, basically tiny uranium pellets.
basically like poppy seed sized like kernels of uranium. And then you put like different types of graphite and silicon carbide layers on top of that. That little particle basically provides like all of the functionality of the big concrete structures in the the light water reactors that are, you know, the the major source of nuclear power today.
The other technology they were exploring, salt reactors, cool the fuel with a bath of molten salt called flyb.
It's a great heat transfer. The fact that the the the melting temperature for the salt is, you know, in like the 400s, like we don't actually can't get the salt hot enough to like stress the fuel in the way that that you could theoretically stress to another actor. So we don't have any scenario that can push the fuel anywhere near where it might actually fail.
The first big unusual thing Kairos did was to combine high temperature gas and salt designs, something no one had attempted before. The combination has the potential to strengthen the safety of the design.
We have the salt as a backup barrier. So if anything happened to to get out of the fuel, the salt has this tremendous capability to absorb to basically anything that that can get out. So that combination means that, hey, as long as I basically keep like a pot of salt with the fuel in it, nothing's really gonna get out of the system. And so that's like a really different starting point from thinking about the safety of the reactor.
Like many nuclear startups, Kairos prioritized passive safety. That is, systems designed to work without any human intervention. And of course, Kairos was thinking about the safety and regulatory process for its nuclear reactor. But the company, unlike many other nuclear startups,
Was actually spending the majority of its time focused on getting good at building all the non-nuclear parts of the system. This is to say, all the parts of the system that don't actually need approval from the Nuclear Regulatory Commission.
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The systems that are needed to ensure that you have the combination of fuel and coolant in the system is dramatically reduced and they have a reduced footprint. That means that what the NRC is focused on in terms of just the physical area of the plant is much smaller. And things that are
really important to safety in conventional reactors are just they don't serve any role. So they can change and they can evolve in design and build and function, but they don't have to trigger any type of regulatory review process.
Mike says this is a huge benefit. It means that Kairos can focus on non-nuclear demonstrations and developments. But back in 2016 when Kairos launched, people thought this was a crazy idea.
Now people are finally catching on that's hey, if you build the non nuclear version of it, you can go much faster, you can learn, you get the information. So o others are kinda c following along and kind of copying that model. But at the time it was it was really novel to build these big non nuclear demonstrations in order to have us go faster in that learning.
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¶ Industry Learnings, Early Labs & Commercial Deals
Cairo studied other capital intensive, highly regulated industries, think pharmaceuticals and rockets, like SpaceX. The lesson? Shorten nuclear's decades-long multi-billion dollar development cycle into something faster and far less costly. And after more than eight years of work, Kairos pulled it off, landing a major commercial deal with two heavy hitters.
The Tennessee Valley Authority, Google, and California based Caros Power announced a collaboration today. TVA will eventually buy nuclear power from that plant in Oak Ridge, which will then supply up to 50 megawatts of energy to TVA's power grid. That grid powers Google's data centers here in Tennessee and Alabama.
So, how did Kairos manage to build a first-of-a-kind nuclear reactor and land a deal with TVA and Google all within a single decade? I talked with Mike about Kairos' journey, including three engineering test units, a demonstration reactor, and a commercial reactor, and the challenges it faced along the way. But first, I told Mike about my first time visiting Kairos.
I want to start actually by telling a quick story, which is that I came and visited Kairos really early on when you all had just moved into your space in Alameda with this gigantic like airplane hangar-sized warehouse. And when we walked into the warehouse, there was a table and it had this like plastic contraption in it that had a whole bunch of like miniature ping pong balls in it.
And it was when you all were basically experimenting with the triso fuel and exactly how the triso fuel was gonna be moving through the system and that sort of thing. So super awesome classic example of like a non-nuclear sort of bench top approach to doing some real experimentation. I came back about a year and a half ago.
And the airplane here looks a little bit different. It was now full of all these clean rooms. You had like twenty people. You're laughing because you know exactly how it looks today. There are experiments everywhere. There's all kinds of really cool stuff happening. The amount of equipment is astonishing. So walk us through kind of how this worked for you. Did you know from the very beginning that you wanted to follow this iterative process?
Did you know from the beginning that you were going to do a whole lot of non-nuclear work first? How did you really get through your paces as a company in those early stages leading up to your decision to build a non-nuclear engineering test unit?
It took us a while to kind of figure out what this was going to look like in practice. Your story about like those original tests, it was there was kind of like this existential moment where we're like, we have the infrastructure, we have this vision, but like
We have so much to do, right? Like to but you're starting off like we got to design new nuclear reactor from scratch. Like where do we start? And we've got I don't know, we probably had eighty people at the time when we moved in in twenty eighteen. It's like what do we focus on? It was like, all right, well what can we do? Like we're gonna focus on this one particular area, basically how we get pebbles out of the reactor. And we were gonna put two teams
on two parallel tracks and we're just gonna have them work through cycles really quickly and we're gonna see how that that process works. You must have seen one of those teams working through when you when you came through. I think what was really crucial about that was we're trying to like interpret what was happening from SpaceX with their iterations um through the rocket development, trying to incorporate learnings from agile development, which really has l a lot of basis in software.
When you're working with hardware systems, there's just going to be things that are different in terms of trying to do the iterative process. And so like those early experiences were really, really an important validation that yes, this process can work, but it gave us a lot of insights into the key things that are going to keep people focused. You can't just say, all right, go do these like 100 different iteration loops.
and figure out what you're gonna do, the most important part of the iterative process is to understand what you're trying to accomplish in any given loop and defining How far to go? Like you want to go far so you're pushing, but but not going too far. We're constantly adjusting the scope of what we're trying to do in our development tests, which sounds simple, but
engineers and nuclear engineers in particular like to have everything like mapped out. It's very hard to train people to to do that. So we've put a lot of investment in figuring out how to adapt that process for us. And a lot of it really did stem from that early period where we were trying to just figure out how do we how do we do this.
¶ Strategic Use of Test Units & Vertical Integration
So let's talk about your decision to build a non-nuclear engineering test unit. So you'd been doing a lot of this iteration, and then you're coming to the point where you're ready to build a more complex sort of proof point version of your system.
Was it always obvious that you were gonna do something that was a non-nuclear demonstration and was everyone immediately bought in? Or did you have moments where you thought, ah, maybe we should move immediately to something that actually has some nuclear fuel in it?
So there was not one mind when we're going through this decision process. So we had this this timeline, which was like twenty eighteen to twenty thirty, to get a commercial demonstration reactor up and running. And that timeline is just it's it's like forever in terms of of engineering and We wanted to create big things that could be done in more like two to four year cycles. And if we do non-nuclear systems, we can we can go faster. That's a huge advantage. The problem is like
At that point we had essentially a commercial design that we were working on. We didn't want to build something that big for the non-unition. So how do you scale down and and what do you define as what you need to actually do in that test? And so we basically said, All right, well we wanna
This the scale has to be relevant. So it's basically about half the you know the length scale is about half as much as the commercial reactor design at the time was. So um the first point was, you know, it's an opportunity for us to go through iterations of all the major uh systems in the reactor. We basically trained a whole like generation of Kairos engineers around the whole life cycle of a major system. And in the nuclear space in particular, because there's so few builds opportunities.
There are a lot of people who just have experience in a very narrow band of that development cycle for the technology. And when you just do that one step, like 20 times, you're missing so much about the overall cycle. And so the value of even relatively junior engineers going through that whole cycle for for one system provided just a huge knowledge base. The other part of it which was really crucial, um, we knew that we would have vertical integration as a key part of the Cairo strategy.
but we didn't know what we would need to to manufacture and build ourselves. The the approach was, well, this is a non-nuclear system. There may be some gaps between that and the actual reactor. If a supplier could deliver for what we needed for ETU, maybe they could deliver what we need for Hermes. We'd have to test that or future reactors.
But if they couldn't deliver what we needed for the non-nuclear system, there was no way they'd have any chance of delivering what we needed for Hermes. So we're actually able to screen out a lot of potential vendors that we we could have spent years and huge amounts of effort
to s like to well can they do it, can they not do it? It really just gave us that data point. Um the other side of it was like getting to operational experience is really important and how everything fits together in an integrated system.
You always have surprises that pop up than when you test all the pieces separately. We built the engineering test unit over the course of three years and built and operated over th over three years. And that whole life cycle of experience, it's the world's largest. uh fly system. I it it will be the largest fly system until we load salt into the second engineering test unit that we're building right now in Albuquerque. So those are the key the key goals.
I love this. Okay. You mentioned that at first it was the engineering test unit, and then it became ETU one of three. So can you tell me? When and what happened with the first engineering test unit? Like when did you know that this was actually instead not gonna be your only engineering test unit?
Yeah. So I think this is like 2019, 2020. Um there's always been kind of the this question. Well, the the iterative process is like start small and then go big. What would be the merits of doing a smaller reactor first? And so now Kairos is building the Hermes reactor in Oak Ridge, Tennessee. The Hermes scale is actually derived off of the scale that we chose for the engineering test unit. And part of that was: hey, if we want to move fast.
On a small reactor, we should leverage the engineering at the scale that we're already working with. So that's going to make it easier, gonna make it faster. The other thing, which was I say a lot of things about what Kairos has done with with great pride and what we're gonna do with a lot of confidence, but you know, doing nuclear power is is challenging and
The the requirements that go into a nuclear vessel, I don't think there's any other system quite like it in terms of the chemical environment, the temperature, the radiation, and all the hardware that just needs to be packed into a really tight space. And we basically said, We're not sure that we can go straight from this smaller scale non-nuclear system to the full scale commercial nuclear reactor design. So
Um we're gonna do a smaller reactor and the goal of that one is gonna be let's be as prototypic as we possibly can for the reactor system. A lot of other things kind of fell out of that. One of them was just a very practical reality. We're gonna put the second engineering test unit in the same space that we're putting the first engineering test unit. We did uh ETU one as a stick build. If we have to wait for ETU one to be fully decommissioned and removed.
And then go in and build, it's going to take a lot longer for us to do that. So hey, we know we want to move to modular build. Everyone's talking about this. We know this is the way to go. Let's do ETU2 as a modular build. and train that capability, develop that capability. And so we stood up a facility to do modular skid fabrication integration at our campus in Albuquerque. We've got over thirty skids. Those are now being installed. There's a lot of learning. Like
People talk about SMRs, M is the modular, you know, part of that. And they just assume that, hey, they do modular build all the time in oil and gas and chemical industry, like it's not gonna be that big of a deal. Well It like one of the key lessons is like that peop things that people assume are gonna be easier often way harder than they think. And so we have a third engineering test unit, which is also under construction in Oak Rouge, Tennessee.
It's a little bit different. It's not going to have salt in it. It's really a low hazard facility for maintenance and operation training as well as demonstration of civil construction interfaces. Um I say a lot of the benefit for
having ETU three was we could tell our engineers like you don't need to worry about solving that like all the way in engineering test unit two. You can leave some uncertainty because we've got the third one. And what we found is that we've got enough learning and enough progress for ETU two. that we feel we can jump from that system to the Hermes reactor with high confidence.
That's super interesting. Okay, so you've got engineering test unit one, which you've built. And then it makes sense that you're moving up in size with your engineering test unit two. And then at the same time you're staying small in size while starting on the nuclear side with your Hermes reactor. And then you're also building engineering test unit three. So fundamentally you're building three things right now.
So tell me a bit more about that. Is that challenging? Is that creating any, you know, challenges within the company like competition for resources? Do you ever get pressure from investors who are kind of like, hey, what are you doing building all these things all at once? Let's do this more serially so you can incorporate the learnings. How do how have some of those tensions come up?
Well zoom out even further. We're cause and and we're we're building a whole lot more than that too. So we're building a salt production facility in Albuquerque and we're also building fuel production infrastructure. So Vertical integration in-house manufacturing is central to Kairos' strategy. It's really important both to
the development strategy, but also to the commercial strategy. So from a business perspective, when we look at like bringing something in-house and doing it ourselves, it's not just that we're controlling costs. and schedules when we do that, we're also capturing value. So our business model is the more we do, the more of the revenue that Kairos captures from the product.
But
For a company that has manufacturing capabilities and production capabilities This is actually a a lesson in the iterative process that's different from I think maybe conventional best practice. In a perfect world, you could go through that life cycle of iteration, get all your experience and have it cycle back through and then build the next one, right? And Maybe even in in the extreme case of rockets.
you know your entire li like product lifecycle is like 30 minutes. And so you can take that experience and you can go then incorporate that back into to the next cycle. The the lifetime for reactors is decades, right? So you can't do that. Um the other side of it is Well you have
the overhead or the investment in the manufacturing capabilities, if you just wait for that operation experience even at smaller timescales, you have a lot of people just sitting around not really doing anything. So for us basically just have build, build, build, build, build as the thing that happens continuously. And so keeping keeping that build machine just heavily utilized and active is
the way that we're gonna get the most efficiency in terms of as an organization pushing things forward. And so there's nothing to do with with nuclear. That's just trying to um run a lean organization efficiently and just that a lot of people don't think that's really possible with with a lot of nuclear development because
The systems are so big, they're so expensive. How do you how do you do it? That's gonna just you gotta shrink the problem into s into much smaller scale bits that that you can do that with.
¶ Multi-Site Operations & Overcoming Setbacks
Yeah, I mean this leads to another question I have, which is about geography, because fundamentally you're headquartered in Alameda. You built the engineering the first engineering test unit in Albuquerque, New Mexico. You're now building Hermes and Oak Ridge along with your ETU three. So what led you to decide to have these different locations and how do you
manage people across all of this and make that cross pollination happen. Like in my mind, I'm envisioning something like 1800 Slack channels for your company or some ungodly way of keeping in touch. So what does that look like?
Um yeah, there are there are a lot of Slack channels. Um I mean I think that there's i in retrospect there's a there's a rationale about why everything is where it is and it was deliberate. The sequencing of sites is is really important and Each site serves different functions. Um, in the early days there there wasn't an obvious place where we could find the people and and put Kairos and just do everything.
There are capabilities that you we can find in people in the Bay Area. There's great software development. We have like a range of different schools to pull from. But we're we're fundamentally limited in the size of like how big we could do things here. Um and so we needed to find another site to do that.
Albuquerque was the place to land. We were already familiar with it. There's an ecosystem with the labs there. There is kind of like a nuclear development world in New New Mexico. But then it was kind of like Well, we wanna build and expand and do more there. And the logical place to put the next thing is either next to the last thing you built or next to the thing that you plan to build in the future.
And both of the Albuquerque sites and the Tennessee sites fit that bill perfectly. So Albuquerque has really Alameda has become the hub for kind of kind of the rapid early early development testing uh for new ideas, but also it's really the hub for a lot of the validation testing that we're doing along the original vision for our models. So we have a lot of our kind of simulation software teams here as well as the testing teams and having that integration provides a lot of value on that side.
Albuquerque is really more around larger scale testing and manufacturing and across the board for reactor systems, fuel and salt, and all that infrastructure. But what we're building there is mobile. The skids can be shipped. So the future builds are not tied to to that location. And then Tennessee, um, there's obviously very strong historical legacy for nuclear development in Oak Ridge. The national lab there has tremendous capabilities, um, but
it really just kind of makes sense as a hub for uh where we're going with the nuclear construction and nuclear operations. And so uh having that vision for how all the sites fit together. It's not easy standing up sites and kind of trying to get them aligned around the same culture and getting every people operating the same way.
It's not easy to travel between Oak Ridge and uh Albuquerque, New Mexico. We acquired the site in New Mexico in February of twenty twenty and part of the the appeal of Albuquerque was all the back and forth direct flights from from Oakland. Um When COVID hit we were we were stuck, right? And so we had to we had to adapt and we're a hardware company, so so being there in person matters a lot. And getting our teams moving back and forth has been instrumental in those facilities, but
Our team is really dedicated. They put in huge, huge amounts of effort, and people really just want to build something. They want to be contributing towards. the first reactor that's gonna get built, that's gonna come online. And so like the travel is is, you know, it it's not great, but and but people know that the value that it provides and they're all going towards the same goal and they know what that is and are hugely motivated to put in kind of huge efforts to make it happen.
Yeah. Well, and so you mentioned that it feels really good. Then when you're kinda ticking on all pistons, you've got the cross pollination among all these sites and folks working together. So it sounds like it's great when it works well.
But you also have moments that are challenging, right? Like you had an issue with a reactor vessel at one point during a particular test. Can you talk about how you overcome some of the things that are maybe not going the way you had hoped or, you know, posing some challenges that you didn't quite expect?
Yeah, so um there they're always challenges and and you know, they range from minor setbacks to um really good head scratchers. For the engineering test unit one, we sourced the vessel from a shop um in Southern California. Very re reputable shop. The costing was very reasonable. Our team was integrated in the design. Like we had a good we had a very good relationship with them.
It's a it's an ASME certified pressure vessel, so it needs to go through a series of testing, hydro uh hydrostatic pressure testing to make sure that it can actually ma remain intact uh within the design basis.
Um so they did this testing. Um they happened to do it horizontally. The vessel was laid down on its side, which was not a great thing. So talking about like the learnings, we have a database that gets filled with all of these lessons. So don't do pressure testing on you know with the vessel on its side.
And that brings us to the reactor vessel mishap from the top of the show. More on that after the break. So Kairos is testing a reactor vessel and it's engineering test unit one, and they run into issues.
You have to go to much higher pressures than the system is actually operating. So we had distortion in the vessel and the vessel ended up out of tolerance.
Um
What what do we do here? Right? This is critical path. The vessel needs to be installed before we can install internals and everything else around it. So like how are we gonna remove the situation?
If this was
the reactor and the vessel is out of tolerance, you would have a You it could be fatal to the project, depending on what you're looking at. It would at least would be a huge delay because you wouldn't have to just replace the vessel. You'd have to do root cause analysis about how you ended up in that situation in the first place to make sure you don't end up there again. In this case, it was
Mm-well the vet i is there a safety issue? Was that was the first question. Like can the op can the vessel be used and will it be safe? And so we we looked at the results and it was like, yeah, the vessel's gonna be fine from a perspective of safety. Um we're not worried about the integrity. Now how do we make everything fit?
Uh and so um in parallel and we have there's a a a sleeve that goes into the vessel and then inside that sleeve are like 300 pretty large like couple hundred pound graphite blocks. That get assembled into this pattern. And there's a you know the the pebbles go into you know through the blocks, there's reactor cores in there. So there's this really complicated graphite assembly that goes in there. And you want to have everything fit together really well because if you have big gaps.
Um you know, if a lot of salt flowing where you don't want to flow. So how this all fits together is really important. We'd made in parallel the decision that we were we were gonna do machining of the graphite blocks. The fact that we had the machining capabilities on site allowed us to process
nearly all the blocks with minor modifications to adapt to the as basically as built geometry, we're able to move forward, install them, and keep everything on track. And I'm there are many things that I'm thankful for, but I'm I'm always thankful for I if the iterations are are set right, you can have things that will be setbacks. I I
I I I tend to be a positive person. So it's like, you know, setbacks are learning experiences that like that's the whole reason why we're doing the iterative development process. I'm thankful that we had that experience with that system and it didn't push forward to Hermes. So um Setbacks happen, but the way that that they fit into the process is um that's why we're doing the iterations, is to kind of
smoke out those weaknesses or those those potential failure modes at the point where you can still recover. And and if we can do that, then everything is is working well. If the failures happen the point where you can't recover, that's like that's the end of the that's the end of the road.
I feel like there's a metaphor in here somewhere. It's like your re your reactor vessel is squished. So it's time to go and uh and machine some squished graphite blocks as a result. And then you're off to the races again. I love how there's adaptability that's really in that.
Um, well, so you've mentioned a couple of times the importance of the vertical integration here and the fact that you do have these capabilities in-house. And it seems like there are plenty of things for which it's a no-brainer, right? That as you mentioned in the nuclear industry. You've got a whole bunch of things that are not manufactured in large quantities and that have all sorts of really, you know, important specifications around them.
Are there any are there any moments though where you find yourself asking the question, you know, for this particular component or for this particular system? should we outsource it or should we build it ourselves? Is that a constant tension that you're facing? Or do you almost always in those cases just default to building things yourselves? Or how do you think about think about those questions as they come up?
We have more confidence now, certainly than we did years ago. The team understands the benefits of taking ownership over not just the design but the build. Uh there's always a there's always a decision and um as the needs evolve, uh like I think the same principles still apply. And one of the key key things is
try not to stretch too far. Uh and so if there's something that's new or dramatically different, it's usually beneficial to start off at least with a partnership um with with someone who has
you know, some part of the key knowledge. And so on the pump, we we started off, you know, we have a partnership with Barbara Nichols. Kairos has absorbed more capability ourselves, but it was a really productive partnership. We we have found partners along the way that are have been great, great to work with.
And if that works out, that's great. Like we wanna we we don't want to do everything ourselves because it it adds to the list of things that need to be done. Right now we're we're pushing the boundaries on the civil construction side, which is Um this is much bigger scale than than
all the other things that we've been setting up to build. And so right now one of the exciting things that is emerging is um the opportunity around uh precast concrete, which is really just like potentially completely transformational in terms of how we build these buildings. Totally conventional and a lot of non-nuclear construction, but how do you do this for the nuclear requirements is is sort of a big open question.
We have again like the iterative approach. So we've been working in collaboration with Oak Ridge, with Bernard, with with other vendors, looking at how to do like three D printed forms and it's kind of generated a lot of attention because it's been moving really fast, really, just the last couple of months through a couple of iterations.
We're we're involved in that, but we're not saying, hey, we're we're not saying we know how to do it the best ourselves. We we recognize what we know and what we don't know. We have to be humble. We can't do absolutely everything we need to find the partners that are gonna be able to work with us as well.
¶ Commercializing Hermes: Regulatory Milestones
Okay, so let's talk a bit more about the Hermes reactor. So again, for for folks who are following the nuclear sector here, you've got your engineering test unit, no nuclear fuel in that. Now you're building Hermes, which is a legit nuclear reactor that's going to have nuclear fuel in it. Can you talk a little bit about what your engagements are like on the customer side? Are you planning to s to actually produce power with this first Turbuse unit? Are you planning to sell that power?
How are you bringing utilities into the conversation? Because I think this is one of the other big hangups for the clean deck sector is to figure out like how do you actually bring in customers, particularly on these first of a kind endeavors.
Yeah, so Hermes, we worked through the plan to do Hermes in twenty twenty. It was in conjunction with a DOE proposal, uh, that was kind of the seeds of the advanced reactor demonstration program. Our approach was This is going to be our plan. And whether we get we get the DOE award or not, like this is our plan. We were selected for a DOE award for the Hermes reactor. The idea was let's do like the minimum viable reactor.
And so take out the things that don't really need to be there and just get to the point where we can definitely, hey, we can design, license, build, and operate. Uh and uh an honest to God, nucle nuc nuclear reactors. And we've gotten huge amounts of value out of that. Even in the con like the construction phases now, we give us give us real data, real cost numbers.
um that are gonna project forward uh how much our foundation's gonna cost for future reactors. We have really good, good knowledge about what those are actually gonna be based on the experience we have uh from from even even to this point in time. So fast forward, we got a construction permit from the aggregatory commission, first advanced reactor, you know, to submit and and get we did it in just over two years. Um that was a huge accomplishment and you know.
Again, something people thought was gonna be really, really hard and challenging and we were able to to navigate that process very efficiently with you know strong technical content and you know just a a lot of hard work from the team. Um, there was a window of opportunity to to do an application for another one. So hey, if we say hey we have this design, if we can uh further leverage it.
and you know not change the reactor uh that much and we can attach power system, we have an opportunity to to continue that build, build, build cycle and do it at the site. We have we already have the site characterize. And so there was an opportunity. We did that. We did the review on Hermes 2. And that, you know, that review came through. Now we have the opportunity to expand there.
Um okay, so very cool. And I think just to just to name the headline here, which is that you now have two reactors that have gone through the nuclear regulatory commission process, which is actually a really big deal, especially because that's something I think that investors in the nuclear world have been nervous about is would the regulatory side of this take too long? And you're already showing that this is possible and you're underway building one of them.
I'm going to ask you a question that is going to make it really clear why I will never be as popular as Joe Rogan. And that is to hang on to something really critical and interesting to me that you just said, which is that you had a novel contract with DOE.
Uh and while I am more interested in most than DOE in DOE contracting structures, I think let's talk about this for a second because it actually is truly novel and really important. So can you say a little bit about historically how Dewey has done contracting and how they've interacted on big projects like this and what's different about the particular award that you got from Dewey.
Yeah. The quick summary there is the conventional DOE contract There are different types of agreements that provide funding into companies. They've been doing these for for a long time. Um, there are a lot of companies who have all the machinery in place to to manage these contracts.
Um but it it it inserts a lot of overhead into you know into the business practices. There's all kinds of requirements around reporting and procurement requirements and and this is all motivated from the from the very You know, genuine desire to make sure that DOE is a good steward of taxpayer dollars, right? There's there's everything, everything is good in this. Um, the problem is that.
Layering in all of that process makes it very hard for organizations to be agile and flexible. And I and part because Yeah, nuclear in particular wants to have everything mapped out. DOE also wants to say, well, if you're gonna go from here to there What does that whole program look like? Exactly. What do you need resource? Well, like they want to know all those details, but for Kairos, we don't know all those details up front. It doesn't really fit with our development process. And so
Yeah, we look for sources of innovation. The the best model we have, and it's a really good one. Um NASA had NASA has different contracting issues than than DOE, but they had like the the cost plus contract.
on various services where contractors, they basically get payment and then they get more payments um when they're overruns. There's there's not really the same level of ability to control or have accountability on those There was an amazing program about 20 years ago, the Commercial Orbital Transport Service Program, COTS program, which basically
The the philosophy was buy a ticket, not a rocket. And um there was great influence from like the venture capital world and basically get NASA to think like an investor, not like a government entity. Um this was put in place.
SpaceX was one of the original selectees. There was another original selectee that actually failed and they canceled the contract. They weren't able to meet some of the milestones. And then Orbital Sciences came in and they were actually a second successful recipient and were able to go through this process.
The key thing is, and this is kind of the fundamental trade, um, you use milestone-based payments. And so instead of paying for work, you're paying for the results. We've had a number of these. We've had two this year for our vessels.
Uh that we installed for engineering test units two and three. It basically allows more flexibility for Kairas, but it provides accountability for DOE. And I think this is a This is the perfect type of trade in terms of you know maintaining stewardship over federal tax dollars, but allowing novel, innovative companies like Kairos to to keep doing things in an innovative way.
Yes, as someone who has the battle scars from the minutiae of the blocking and tackling and recording and budgeting and hourly tracking of who is spending what kind of time on what, um, I agree with you. I really hope that Dewey does more of this in the future.
¶ TVA-Google Partnership & Future Scaling
Okay, so let's get into Hermes 1 and Hermes 2. So you decided to build Hermes 1 at the same scale as your ETE one. It's not gonna produce power, but Hermes 2 is. So talk a little bit about. Well, I guess first of all, let's talk about Hermes 2 and the power production opportunity there. Is this power that you're going to be selling into the grid? How are you thinking about that in the context of your customer base?
Yeah. So with with with Hermes One we really wanted to to be true to the idea of a minimum viable product and product without electricity, maybe that doesn't quite match up perfectly. Um, but we really needed to just prove that we could deliver a nuclear system. Uh for us, really the demonstration was around the ability to deliver the nuclear heat.
And um really just focusing on what are the essentials. The opportunity for Hermes two, um, was pay if we we're gonna build this reactor, well, why don't we go quickly for permits to build more of them. And because our architecture means that the the things that are important for safety in the regulatory space is pretty narrow, we can actually change the design in a very basic way for
the the power generation side of the system and the feedback loop into licensing is almost nothing. So the technical review on that reactor is basically for the things that you're adding to the system, does it Does it have a feedback loop that's going to impact the safety? And and the NRC basically concluded, no, there's no feedback loop. So the safety case looks exactly the same.
Um the original decision to pursue Hermes two was, hey, we're gonna be building one of these reactors. Like let's seize on this moment and keep building. Again, build, build, build and do more of them. Um Turns out we've we've been learning a lot and you know gaining confidence in certain aspects. And when we think about doing the evolution design.
There would only there was only gonna be one Hermes 2 because it wasn't really quite viable as a full commercial product offering. We'd have to scale up. And so as we're thinking about it, well, the question came, but what if we could have could make Hermes 2 essentially a single unit reactor at essentially the full scale uh system for demonstration. Just basically convert it into a demonstration reactor for our commercial scale product offering.
We were kind of looking through all the different applications here, and we actually concluded that yeah, we we can do this. And so we were kind of working through this process and in parallel working on the commercial side. And so we have a really exciting announcement that we just had with TVA and Google. That that kind of puts together a novel commercial arrangement around this new evolution of the plant itself. And so it really is kind of a novel structure that allows.
um all three parties to benefit from the process and it kind of allows Kairos to develop the the project. uh Google to get the the clean energy attributes and TVA to get the power in a way that really is kind of it makes everything work in a new way. And and innovation also happens on the commercial side, not just on the hardware side.
Okay, and so what comes next? What are you gonna build after all of these reactors? When are you gonna start building these things commercially all over the place? When are you going outside the United States? Couple minor questions about your roadmap tohead.
Yeah, so I'll kind of go back to the context of of our agreement with Google. It provides essentially the process of how we're gonna not build just one reactor, but multiple reactors. And so when we look at the five hundred megawatt total capacity for Google. Uh we're looking at kind of the 50 megawatts uh on the Hermes 2 side. And then we're looking at basically
six more reactors to deliver at 75 megawatts each as kind of an evolution of that um that initial demonstration in in Hermes too. So if we kind of if I lay out the plan for the next ten years. That's pretty much what Kairos needs to to deliver. But that's that's that's a lot to to to take on in terms of the number of builds. But if we can build that sequence, it really allows us to to realize. most of the benefits of that learning curve. And we see the ability in ingest those first
Essentially seven reactors, like dramatically bringing down the capital costs 40, 50% is possible. And then we're staged for the second half of the 2030s to scale from there when we really have things dialed in and we know what we're doing. And I I think about this a lot actually because there are there's there are lots of examples of of different failure modes in the energy space. But one of the scary ones is where
Everything is looking great. You know, you're getting huge amounts of capital and say, hey, if I can do more, then I can get to more revenue faster. Like that's gonna be great. Like why why would you not do that? But there are cases where trying to do too much too fast. Can can be a failure mode. So the North Vault example is a really important one where I I have to do the thought experiments.
If they had not tried to do as much, tried to build as many plants, if they had just focused on one plant doing it really well for the initial execution, like would that have been a model for but would that have been a more likely model for success? So for us it's it's Being very ambitious to try and do a lot, but also being a little bit cautious to make sure that we're not oversubscribing until we know that we can actually deliver what we're what we're committing to.
Always a challenging balance. Um, well, that is a fantastic note to end on. Mike, thank you so much for joining us here on the Green Blueprint. This has been a fascinating conversation and we really appreciate all your insights.
Uh Laura, it's really been a pleasure. Thank you so much for having me.
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Mike Loffer is the co founder and CEO of Kairos Power. The green blueprint is produced by Latitude Media in partnership with Trellis Climate. The show is hosted by me, Lara Pierpoint. This episode was produced by Daniel Waldorf and Aaron Hardick. Ann Bailey is our senior editor. Sean Marquand is our technical director. Stephen Lacey is our executive editor. If you'd like to suggest topics or guests for the show, send an email to thegreenblueprint at latitudemedia.com.
You can listen to the green blueprint at latitudemedia.com or subscribe wherever you get podcasts. And if you have fellow clean energy or climate tech travelers who would benefit from the insights in this show, send them a link. This is the Green Blueprint, a show about the architects of the clean energy economy.
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